February 2012

February 15, 2011

Jens Martin Skibsted and Rasmus Bech Hansen have an interesting article in Fast Company arguing (correctly) that companies should lead their users, not the other way around.

The mythology is that “the user is king… Companies must become user-centric. But there’s a problem: It doesn’t work. Here’s the truth: Great brands lead users, not the other way around.”

Citing the example of Apple [AAPL], they quote the Apple design team who say: “It’s all bullshit and hot air created to sell consulting projects and to give insecure managers a false sense of security. At Apple, we don’t waste our time asking users, we build our brand through creating great products we believe people will love.”

Equally, they cite IKEA designers who “don’t use user studies or user insights to create their products. When I asked them why, they said ‘We tried and it didn’t work.’”

Instead, the best brands delight their customers because they are “guided by a clear vision for the world, a unique set of values, and a culture that makes them truly unique and that no user insights could ever change.”

They give four reasons why it’s harmful to follow slavishly what users say:

Users insights can’t predict future demand. The users themselves often have no idea if they will like an breakthrough product before they start using it.

User-centered processes stifles creativity: “The user-centered process is created as linear rational process for innovation and that’s why it’s so popular among managers… creating something new is a chaotic, unpredictable, frustrating, and very, very hard process. And most of all, it’s the result of extraordinary efforts and visions of a few extremely talented people.”

User focus makes companies miss out on disruptive innovations: “Focusing on users will lead companies to make incremental innovations that typically tend to make the products more expensive and complicated and ironically, in the long run, less competitive.”

User-led design leads to sameness: “Even if user insights were useful, it isn’t a competitive advantage. Even the most advanced users studies are now widely available.”

In short, user-based design will result in average products, that might satisfy users, but will not delight them. The extra spark has to come from a combination of deep understanding of the users and the inspiration and creativity of a small team that can figure out what would make a real difference.

One caveat that should be added: one needs to be careful not to interpret this to mean that designers don’t need to pay attention to users. On the contrary. They need to have a deep understanding of users, an understanding that goes beyond what the users themselves can say, because it combines an understanding of the hopes, dreams, irritations and fears of the users with what the designers can contribute to promote those hopes and dreams or avert those irritations and fears.

The Decline of US Management

The reality is that this is not a merger. The NYSE is being bought. If the sale goes through, the NYSE will no longer exist as an independent entity. Putting up regulatory road blocks might delay the denouement, but ultimately those efforts are pointless. Instead, business leaders should examine the root cause of what is happening: the declining life expectancy of US corporations.

Studies such as Deloitte’s Shift Index show that management in the US private sector is in sharp decline. The return on the assets of U.S. firms is only a quarter of what it was in 1965. The life expectancy of firms in the Fortune 500 is already startlingly brief—now less than fifteen years and heading towards five years, unless something changes. Executive turnover is accelerating.

The topple rate of leading firms is accelerating. Even leading firms are succumbing to competition more rapidly. The Shift Index notes: “Nearly every advantage, once gained, is shown to be temporary. The notion of “sustainable” competitive advantage is increasingly illusive as the pace of change in the business world speeds up.”

Rather than lamenting the fall of American dominance or putting up regulatory road blocks to prevent the sale of the NYSE, it would be better for business leaders to spend their time doing something about the root cause of the problem and rethinking how their organizations are being managed.

The Failure To Innovate

In essence, the fall of the NYSE is another example of a once-dominant US corporation that has failed to innovate. For many years, the NYSE had a central, public, largely transparent market. “But the world has changed,” as fellow Forbes contributor, Emily Lambert, points out. “Exchanges went public, and other markets opened. Right now we have a fragmented, sometimes uncoordinated and volatile marketplace where some areas have little transparency, both in stocks and derivatives.”

The world changed and the NYSE failed to adapt. It is now pursuing a “merger” in the hope that economies of scale will resolve its difficulties. The reality is that economies of scale often lead to declining returns, cripple agility and merely presage bigger issues down the track.

If we draw the lessons of the Shift Index, we can expect to see more examples like the bankruptcy of the American icon General Motors and the sale of American icon the New York Stock Exchange as increasingly familiar experiences unless basic changes in management take place.

Reinventing Management

The key to survival in today’s marketplace is a different kind of management that doesn’t depend on hierarchical bureaucracy and economies of scale. Instead, it prospers by combining continuous innovation with disciplined execution. Instead of a single-minded focus on efficiency, it aims at generating more value for customers sooner.

For an comprehensive account of the rise and fall of 20th Century management as well as an account of the principles and practices underlying the reinvention of management, read my book, The Leader’s Guide to Radical Management (Jossey-Bass 2010).

February 14, 2011

The New York Times reported last week on new evidence the power of storytelling in medicine.

In 2004, the New England Journal of Medicine endorsed the importance of storytelling in medicine in its issue of February 26, 2004. The NEJM article by Professor Rita Charon argued that health care professionals and patients are increasingly recognizing the importance of the stories they tell one another of illness. This is not only a diagnosis encoded in the narratives patients tell of symptoms, but also deep and therapeutically consequential understandings of the persons who bear symptoms are made possible in the course of hearing the narratives told of illness.

Last Thursday, the New York Times reported: “Despite the ubiquitousness of storytelling in medicine, research on its effects in the clinical setting has remained relatively thin. Now The Annals of Internal Medicine has published the results of a provocative new trial examining the effects of storytelling on patients with high blood pressure. And it appears that at least for one group of patients, listening to personal narratives helped control high blood pressure as effectively as the addition of more medications.”

February 13, 2011

An interesting account by Simon Caulkin of nine UK organizations that are Managing For The Better concludes among other things:

"The opposite of top-down is not bottom-up, but outside-in. GE’s Jack Welch once defined hierarchical organizations as places in which 'everyone has their face toward the CEO and their ass toward the customer'… The focal point is the customer who defines the organization’s purpose and thus the value work that it exists to carry out.”

Jack Welsh was however unsuccessful at General Electric [GE] in getting everyone in the firm with their face towards the customer because that would have meant—in his cosmology—that the employees would have their ass to Jack Welch—something that the steep hierarchy at GE didn’t tolerate.

The Inside-out Perspective

GE remained, like most organizations in the Fortune 500, with an inside-out perspective, pushing products at customers, with the mindset, “You take what we make.” Efforts were made to “parse and manufacture demand” so that the products and services would be sold, and to tweak the value chain to achieve ever greater efficiencies, as explained by Michael Porter and Mark Kramer in a recent HBR article, How To Fix Capitalism. The role of managers was to control performance against the plan in order to generate value for shareholders. GE was an exponent of shareholder capitalism.

The well-known problems of the Fortune 500, including steadily declining rate of return on assets, the declining life expectancy, and the declining share price of firms like GE, have occurred, not because managers have forgotten how to manage, but rather because the world has changed and the Jack Welch school of management hasn’t.

Fifty years ago, large corporations were essentially in control of the marketplace. No longer. The advent of global competition, customers’ access to reliable information and their ability to communicate with each other through social media has meant that the customer is now in command. The shift goes beyond the firm paying more attention to customer service: it means orienting everyone and everything in the firm on providing more value to customers sooner.

The Age of Customer Capitalism

We are in effect now in the age of customer capitalism, which has occurred, as Roger Martin explains in his HBR article, The Age of Customer Capitalism, because of a monumental transition in the power balance between seller and buyer. As a result, the firm’s goal has to shift to one of delighting clients: i.e. a shift from inside-out perspective (“You take what we make”) to an outside-in perspective (“We seek to understand your problems and will surprise you by solving them”).

The shift was foreshadowed in 1973, by Peter Drucker when he wrote: “There is only one valid definition of business purpose: to create a customer. . . . It is the customer who determines what a business is. It is the customer alone whose willingness to pay for a good or for a service converts economic resources into wealth, things into goods. . . . The customer is the foundation of a business and keeps it in existence.”

In 1973, it was enough for an organization to have a customer—someone who is willing to pay for the good or service. In today’s more intensively competitive world, merely having a customer who is willing to pay for the good or service is a precarious existence for any firm. The key to an enduring future is to have a customer who is willing to buy goods and services both today and tomorrow. It’s not about a transaction; it’s about forging a relationship. For this to happen, the customer must be more than passively satisfied. The customer must be delighted.

Time now assumes a new importance: if value can be delivered sooner, it is more likely to generate delight. Simon Caulkin points out in Managing For the Better: what matters are end-to-end costs, not unit costs:

Most service managers focus on unit or transaction costs as their measure of efficiency. But unit costs only measure activity, which has no necessary connection with purpose. Offshored contact centres have low transaction costs, but many of them are either processing or creating failure demand which would be better not transacted at all. Service costs that matter are measured end to end; reducing them may mean raising transaction costs to make it easier for customers to get the service they want, when they want it.

As reformulated, the goal of the firm accurately mirrors the fundamental transformation in the power structure of the marketplace.

As Simon Caulkin notes in Managing For the Better, this entails a shift in thinking from cost to value for customers.

“Managing cost drives cost up. Cost reduction is a byproduct of focusing on value. Most managers assume that improving service pushes costs up. But that is the consequence of a faulty definition of service. By driving out failure demand, working to deliver the service that people need in the shortest possible time with the minimum effort releases capacity and reduces overall cost.”

Continuously generating more value for customers is not just the goal for the CEO or the marketing department: it becomes the operational goal of everyone in the organization.

Familiar examples of firms that are delighting their customers include Apple [AAPL], Amazon [AMZN], and Zappos.

The Alternative to Top-Down Control Is Not Anarchy

GE under Jack Welch however did not make the transition to customer capitalism. Why? The problem for Jack Welch in getting GE’s employees to face the customer was that he also wanted the employees to face their managers. The result was a gymnastic impossibility which generally resulted in the customer being subordinated to the needs of the organization.

In the steep hierarchy of GE, managers controlled the work of employees, an arrangement that was reinforced by the bureaucratic reporting arrangements.

In such settings it is often assumed that the only alternative to top-down control is anarchy. What is often missed is that for employees to be truly facing the customer, the role of the manager has to undergo a fundamental change. The manager's role needs to shift from a controller to a enabler and the mode of coordinating work had to shift from bureaucratic plan-driven processes to what may be called dynamic linking, in which the customer becomes the boss. In dynamic linking, work is done in short cycles and measured not by managers as against a plan but rather by direct feedback from clients as to whether they are delighted. In effect, in order to have organizations consistenly facing the customer, management itself has to be transformed.

What Makes The Transition Difficult

What makes the transition to the transformed management difficult for managers like Jack Welch is that it involves more than acquiring some new techniques or tools to be implemented within the framework of existing managerial assumptions, values, attitudes and ways of communicating. Instead, it involves a transformation of many of those assumptions, values, attitudes and ways of communicating.

Thus for Jack Welch spent his entire life focused on "winning" and doing whatever it took to win, and telling other people what to do so as to create "wins". He was looking at the world through a lens of self-regarding behaviors and values, i.e. from the inside-out.

In order to transform an organization into one which could delight its customers, the managers and the people doing the work have to transform themselves as well. They need to be looking at the world through the lens of other-regarding behaviors and values. Instead of creating wins for themselves, they need to be creating wins for the customer. As individuals, they also have to adopt an outside-in perspective. Instead of telling people what to do, they need to be having adult-to-adult conversations.

Transforming lifelong attitudes and values will not be easy for some managers. For others, it will be relief to be able to abandon traditional management habits of manipulating employees and customers and instead follow their natural preference to treat people as people and engage in authentic adult-to-adult conversations. But however the transition happens, it has to happen: the transformation has become the price of survival in today's marketplace. The economics makes it inevitable.

An interesting comment made by chiefalchemist on my post about “The Litmus Test for Leaders: What Am I Tracking?” deserves wider attention: “The structure of the 20th century was as much a reflection of the characteristic of the human resources, as it was of the needs of the business. That is, silos and one-dimensional job descriptions came about because they had to (given human nature and the talent available) not because any owner/leader wanted them to. For leadership to become agile, so must the entire workforce – not just the knowledge workers.”

As I explain in my book, The Leader’s Guide to Radical Management (Jossey-Bass, 2010), back in the early 20th Century, traditional management was a function of the available human resources, i.e. semi-skilled labor. And so the task of management become one of turning all work into semi-skilled work.

Today the situation is very different. Much of the semi-skilled work is being done by machines. The workforce is now educated and also hyper-connected through social media with what is going on in the world. And the customers are no longer willing to put up with average products and services. They have to be delighted.

As a result, the task of management has become the opposite. Instead of turning all work into routinized semi-skilled work, it’s the opposite: it involves turning all work into work focused on delighting customers, i.e. knowledge work, which in turn requires committed knowledge workers. In effect, all work becomes knowledge work.

As Toyota [TM] has shown, there is no such thing as unskilled labor: there is only work to which intelligence has yet to be applied.

In today’s rapidly changing workplace, however, fixed plans quickly become obsolete and constrain innovation. With the epochal shift in the balance of power in the marketplace from seller to buyer, the capability to adjust to rapid change and to innovate becomes the deciding factor in the game. Moreover as all work is increasingly knowledge work, efforts to control those doing the work become counter-productive. Innovation requires not controlling the knowledge workers, but rather unleashing their talents and creativity.

Another view, is that of the thousands of things to track, the real art is deciding on a few key metrics of no more than 5-8 items and then sharing them and tracking them relentlessly. In effect, it means controlling five to eight different plans.

Still another view is that leaders should be tracking their interactions with their employees such as the number of times they communicate face-to-face. Face-to-face is still the most effective medium for any message that has an emotional component. The problem here again is that interactions with staff, beneficial as they may be, are a means to the goal, not the goal itself.

The real goal of organizations

In the 21st Century, leadership requires more agility. In effect, the epochal shift in power from seller to buyer in a rapidly changing marketplace means that the customer becomes the effective boss of the organization and of those doing the work. Controlling against plans, or tracking 5-8 variables, or monitoring interactions with employees amount to tracking the means to the organization’s goal, not the goal.

Instead the leader must be tracking achievement of the organization’s goal. In the 21st Century, that goal is clear and simple: delighting one’s customers. The leader’s role becomes that of an enabler rather than a controller. The leader enables those doing the work (knowledge workers) to deliver more value to customers sooner. Controlling against plans and interactions with employees are only relevant to the extent that these elements are contributing to the goal. The only thing that ultimately matters is whether the organization is achieving its goal: delighting the customers.

Tracking the means to achieve the organization’s goal is a game for losers. Real leaders have a tight focus the only thing that ultimately matters: the goal of delighting their customers.

February 09, 2011

In amongst all the many enthusiastic comments and twitterings about my article, Shhhh! The Next Really, Really, Really Big Thing is… which was prompted by Greg Satell and which suggested that the next big new thing is the REINVENTION OF MANAGEMENT, Tim Carroway commented”

“Hasn't this happened before? Aren't there already groups of smart people doing great things?”

And Keith Decie commented:

“Why fantastic? Any of us would probably make pretty much the same list if we read HBR. What am I missing?”

Some wonderful articles

Interesting points. In fact, if you read Harvard Business Review, as I do, you do indeed find some absolutely wonderful articles which point in the direction of the reinventing management. Several in particular stand out for me:

Gary Hamel’s classic article, “Moonshots for Management” (HBR, February 2009) which sounded the alarm that there was something fundamentally wrong with the way many organizations were being managed and called for a wholesale reinvention.

Roger Martin’s landmark article, “The Age of Customer Capitalism” (HBR, January 2010) which signaled a fundamental shift from shareholder capitalism (an inside-out focus on making money for shareholders) to customer capitalism (an outside-in focus on providing value for customers).

Umair Haque’s wonderful HBR blog, which has a wealth of material about what’s involved in the fundamental reinvention of economics and capitalism.

A march into the past

At the same time, I also find in HBR quite a few articles that purport to be forward progress, but in fact represent a determined march back into the past. Notorious examples include:

If we look back over the last fifty years, the reality is that management hasn’t advanced much. Gains in one area are wiped out by backsliding in another.

Statistics confirm that management as a whole is in sharp decline. The return on the assets of U.S. firms is only a quarter of what it was in 1965. The life expectancy of firms in the Fortune 500 is already startlingly brief—now less than fifteen years and heading towards five years, unless something changes. Executive turnover is accelerating. Only one in five workers is fully engaged in his or her work. Firms older than five years contributed zero net new jobs for the U.S. economy in the period from 1980 to 2005. By and large, the private sector is no longer providing a good livelihood for all the country’s citizens. This is not a record of success.[i]

Three debilitating syndromes

Three factors in particular play an important role in this failure of management to advance:

a. The Amnesia/Eureka! Syndrome

One of the problems in management writing is a tendency to forget the past, and then rediscover it with shrieks of “Eureka!” Thus ever since Mary Parker Follett was talking about teams and the human factor at Harvard and Oxford in the 1920s, successive writers have “re-discovered” teams and the human factor with great fanfare. This includes Elton Mayo and Chester Barnard in 1930s, Abraham Maslow in the 1940s, Douglas McGregor in the 1960s, Tom Peters and Robert Waterman in the 1980s, and Smith and Katzenbach in the 1990s. There is a lack of historical perspective in the writing. “Teams and the human factor” are presented as “the big new thing”, when the idea has been around for close to a century.

b. Old wine in new bottles

The second phenomenon is that minor tweaks are hyped as major changes. It is only after a number of years of excited but troubled implementation, many consulting dollars spent and millions of books sold, that it becomes apparent that “the big new thing” is largely a relabeling of existing management thought. “Business process reengineering” is a notorious example in the early 1990s, while in 2011, “shared value” shows all the signs of following in its footsteps.

c. The virgin birth of management articles

Intellectual disciplines that advance systematically keep track of the evolution of the subject. Writers are careful to give credit to predecessors, signal alternative viewpoints and demonstrate sensitivity to the evolution of the subject as a whole. By contrast, journals such as Harvard Business Review systematically eliminate traces of earlier thinking about the subject at hand. It is as though the articles have “a virgin birth” and emerge into the world without any legitimate parentage. Thus you could read the January article on “shared value” entitled “How to Fix Capitalism” by Michael Porter and Mark Kramer without getting any hint that a similar argument was put forward some five years earlier by C.K. Prahalad in his book, The Fortune at the Bottom of the Pyramid. Any such reference would of course have undermined the hype that “shared value” is the “next big new thing” that will “fix capitalism”. The reality is that shared value was worthwhile idea in 2006 when C.K. Prahalad proposed it in 2006 but it didn’t “fix capitalism” then. It is highly unlikely, by itself, to “fix capitalism in 2011. This is not the fault of the individual writers, but rather the “house style” that eliminates historical references. (Thus when my own article, “Telling Tales”, was published HBR in May 2004, it was also shorn of any reference of prior writing on the subject, mine or anyone else’s.) The problem is not the individual writers. It is the house style of presenting ideas as though they have a virgin birth.

Distinguishing real and counterfeit change

Is then the REINVENTION OF MANAGEMENT simply another instance of the Amnesia/Eureka syndrome, or Old Wine in New Bottles, and the Virgin Birth syndrome?

In my book, The Leader's Guide to Radical Management, I offer a detailed history of the evolution of this thinking and an analysis of the respects in which these shifts resemble or differ from management practices in the past.

I believe that there are two main respects in which the new thinking is genuinely new and different.

One is the shift from an inside-out perspective to an outside-in perspective, so as to focus the entire organization on delighting the client, rather than on making money for the shareholders. This shift is fundamental because it reflects the fundamental shift in the balance of power in the marketplace from seller to buyer. Books and articles that purport to reinvent management without reflecting this shift are, I believe, committing the sin of “old wine in new bottles”. (For example, this is the major weakness of the Porter/Kramer article entitled “How to Fix Capitalism” on "shared value": it is written from an inside-out perspective of making money for shareholders.)

The second respect in which the reinvention of management is genuinely new is not that any single one of the five shifts is new. What is new is doing all of the five shifts simultaneously. Thus the shift from inside-out to outside-in has deep historical roots in marketing thinking for many years. So one might be tempted to say: “Nothing new here!” What is different is combining marketing thinking with the other four shifts so that you get disciplined execution and continuous innovation. That is something genuinely new.

By contrast, books and articles that focus on only one or two of these five shifts may help generate some gains in some areas, but the gains will not be sufficient to reverse the sharp decline in management performance noted above. The major gains come from doing all five shifts simultaneously. It is then that we get a genuine reinvention of management.

February 07, 2011

In this interesting TED video, Tim Jackson discusses prosperity and sets out to re-imagine economics to serve the full potential of humanity.

He notes that we spend money we don't have on things we don't need to create impressions that don't last on people don't care about. Yet if we stop hunker down and stop spending this is disastrous for the economy. Tim asks: Why do we act this way?

What sort of creature are we?

What sort of creature are we? Are we merely novelty seeking hedonistic selfish individuals? Or are altruistic selfless individuals who care for others and try to do the right thing?

Tim’s interesting answer is that we are both. We are both self-regarding at times and other-regarding at other times. From an evolutionary viewpoint, this makes sense. Selfish behavior is adaptive in certain circumstances. Fight or flight is not a bad approach to a threat to one’s life.

But other-regarding behaviors are also essential to our evolution as social beings. Other-regarding behaviors are important to create families and social groups.

Other-regarding behaviors are particularly important for today’s organizations which depend on delighting customers for their survival and collaboration within the organization to create innovation that will delight customers.

A map of the human heart

All of a sudden, as Tim points out, we are looking at a map of the human heart.

We have created systems and economies that systematically privilege self-regarding behaviors over other-regarding behaviors. We have privileged one narrow quadrant of the human soul. We have left the other parts of the human heart unregarded. What we need is an economics that reflects both aspects of our human nature.

The good news here is that reinventing economics doesn’t require changing human nature. It isn’t about curtailing possibilities. It’s about opening the possibility of becoming fully human. It’s about recognizing the depth and the breadth of the human psyche. It’s about building institutions that protect and nourish the fragile altruist within all of us.

Economics that captures our full humanity

What would economics look like if we took that vision of the human heart and stretched them along the dimensions of the human psyche? We would be investing in a meaningful prosperity, providing capabilities for people to flourish, while recognizing the importance of family, friendship, commitment, society and participating in the life of this society.

We would be investing in places where we can connect, where we can participate, shared spaces, concert halls, gardens, public parks, libraries, museums, quiet centers, places of joy and celebration, places of tranquility and contemplation, a common citizenship, a shared present and a common future.

Prosperity is a shared endeavor. It’s not about changing human nature. It’s about adopting an economics that is fit for purpose. At the heart of that economics Is the idea of something more credible, more realistic, more robust, about what it means to be human.

Organizations that generate delight

It would also mean reinventing the way we run organizations, built not on the sole basis of self-regarding profit-seeking motives, but rather organizations that are focused on providing thick value and delighting their customers. These organizations depend on other-regarding behaviors: collaboration within the organization to create innovation that will generate that client delight.

February 05, 2011

Everybody should be excited about the next big thing. And why not? It’s very, extremely big. Even bigger than anything that came before. No, really, it’s that freakin’ HUGE.

If you don’t want to get left behind, you’ve got to hop on this right away. Of course, you will need to be fast and smart and work late nights, but it will be worth it. You can’t go halfway on a thing like this. It’s all or nothing, baby!

He then runs through some of the previous “really big things” that didn’t turn out to be so big after all, including eCommerce, search and social media. They are big, yes, but REALLY big? And do they LAST? Greg is not so sure.

That's the next really big thing? The fact that this could even be considered as a bold new idea shows how badly management in the typical Fortune 500 company is broken.

Greg's point is that if you can get a group like that together and sustain them, they will be able to generate any number of really big ideas.

According to Greg, the elements to accomplish this include:

In-House Training

Focus On Intrinsic Motivation

Best Practice Programs

Coaches and Mentors

Firing Nasty People

A Community of Purpose

So the next big thing is really not so much in any particular idea but rather in how the idea will be developed. “The difference” says Greg, “will be made by the people, how they are developed and how they treat each other. If you wanna win a horse race, ya gotta have the horses.”

I’m inclined to agree that the next really big thing does indeed involve getting really smart, driven people to work together well. What I’m less sure of whether Greg has identified all the elements necessary to sustain that.

Some needed ingredients to sustain it

Experience shows that the following additional elements are essential to sustain "a group of really bright people working well together”:

An intense focus on delighting those for whom the work is being done: It’s pretty easy to get a bunch of bright people working on something they all enjoy and believe in. But unless that something happens to be what turns other people on and gets their juices flowing, then the chance of the effort being sustainable is low. This is the Google Fallacy: the idea that if you get a bunch of bright people together and give them time and space to develop new ideas, they will come up with business winners. After almost ten years, the experience at Google is dismal: sure, they have come up with a lot of bright ideas, but of all the ideas generated, only Android is really making money. Bright people working together on something they believe in is fine, but unless the effort is tightly focused on who they are doing it for, the effort is unlikely to be a business winner.

The need for dynamic linking: Having a handful of people doing their own thing is fine, but once an idea takes off and the group starts to grow, then the issue becomes: how is the work of this growing group is going to be coordinated, so that you get disciplined execution as well as innovation? If you introduce the traditional management approach of hierarchical bureaucracy, the air goes out of the balloon. To combine innovation with discipline, you need to coordinate the work in an Agile fashion, by what may be called “dynamic linking” i.e. (a) the work is done in short cycles focused on producing finished work for the ultimate customers. As The Power of Pullpoints out, you proceed “by setting things up in short, consecutive waves of effort, iterations that foster deep, trust-based relationships among the participants."

A shift from economic value to values: The group’s goal also has to shift from a preoccupation with making money to a preoccupation with the values that will grow the group by generating innovation and customer delight, particularly radical transparency, continuous improvement and a culture of learning.

Horizontal communications: The energy of the group is unlikely to be sustained if communications take place in the traditional top-down approach of boss to subordinate.Instead communications need to be horizontal conversations, with adult-to-adult interactions, human being to human being, using stories, metaphors and open-ended questions.

Thus it’s not enough just to have the horses. You have to have the other elements in place that keep the horses winning race after race.

To learn more

In effect, the next really big thing is the REINVENTION OF MANAGEMENT. It will have proFound effects on every organization in the world. It combines continuous innovation with disciplined execution. Because it is more productive than traditonal management, the economics make its adoption inevitable.